Ford considers selling Volvo to raise $8bn

Ford, the struggling US motor industry group, is considering plans to sell off Swedish car maker Volvo in a deal that would fetch it some $8bn (£4bn) and enable chief executive Alan Mulally to focus on building the company's American brands.

The group, which lost a record $12.7bn last year, is understood to be weighing up the option of offloading Volvo in the wake of the £497m disposal of Aston Martin earlier this year and the planned sale of Jaguar and Land Rover later this year.

The mooted sale of Volvo - bought for $7bn in 1999 - would complete the dismantlement of Ford's premium car division (PAG) under Mr Mulally, who has closed 13 North American plants and axed 35,000 jobs. But the Swedish carmaker is said to be highly profitable, contributing the bulk of the $420m earnings the PAG made in the first quarter.

A PAG spokesman said: "Ford Motor Company is not in any discussions with any companies relating to selling Volvo. But since last year we have been assessing our operations around the globe and looking at strategic options which any responsible business would do."

Sources dismissed reports that a decision to sell Volvo had been taken, pointing out that this would require filings to stock market regulators such as the SEC.

They also indicated that Mr Mulally will be under pressure to give details of the Jaguar/Land Rover sales process and any planned Volvo move when he delivers second quarter results on July 26. Indicative bids for the two UK-based companies are due a week earlier but no decision is likely before the end of the year, with unions last week demanding a say in the outcome.

These moves come amid signs that Ford could be having second thoughts about its disposals policy. Land Rover, whose US sales went up 8% in the second quarter, is expected to make $1bn profits this year while Jaguar is said to be improving.